Which of These Is an Entity Who Will Buy Accounts

question 65

Multiple Choice

Which of these is an entity who will buy accounts receivable before they are due on a discounted basis, with the spread between the discounted price and the receivable's face value providing them with the expected compensation for both the time value of money and for the expected level of defaults amongst the accounts receivable?

• A) commercial bank
• B) factor
• C) receiver
• D) blanket loaner

Recognize the importance of adopting industry standards (like ISO 9000) and total quality management programs for quality assurance.

Understand the implications of product tangibility on quality measurement.

Acknowledge the impact of resource limitations on choosing quality control methods.

Understand the purpose and structure of organizational charts.

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Definitions:

Excess Reserves

The reserves that banks hold over and above the legal requirement set by the central bank, available to lend or invest.

Income-producing Assets

Assets that generate revenue over time, such as rental properties, stocks, or bonds.

Banking Regulators

Agencies or bodies responsible for overseeing banks and ensuring the stability, safety, and compliance of the banking sector.

Federal Funds Market

A financial market that allows banks to borrow or lend excess reserves to one another, typically overnight, at an interest rate called the federal funds rate.